Recently we have seen governmental agencies in Florida requiring professional service firms to accept broad contractual defense and indemnity obligations. This is a trend we are seeing across the U.S. state and local governments as they appear to be attempting to insulate themselves and their political leaders from any project risk. But design firms in Florida have protection from such uninsurable and unmanageable exposures—as long as they understand and enforce Florida law.
Contractual defense and indemnity provisions must conform to highly specific state law requirements. In Florida the legal constraints on such contractual obligations have always been somewhat unusual. While parties are fairly free to negotiate anything in private sector contracts, for the last decade in Florida there has been a law that precludes public entities from requiring contractual provisions that exceed the normal legal liability of design firms to correct harm to the extent it is caused by the design firm’s deficient performance. The actual provision that does this is Florida statute 725.8, which states: “a professional services contract entered into with a public agency may not require that the design professional defend, indemnify, or hold harmless the agency, its employees, officers, directors, or agents from any liability, damage, loss, claim, action, or proceeding, and any such contract provision shall be void as against the public policy of this state.” This prevents the governmental entity from requiring an upfront defense paid for by the design firm or a payment to indemnify the client related to “any” action. Therefore, the design firm’s exposure remains the reimbursement of costs, losses, or damages to the extent caused by the design firms’ negligence—which is within the scope of professional liability insurance coverage—recklessness, or intentional wrongful conduct.
This language is a great model for adoption in other states. It is an important protection that all construction-related professionals in Florida should be referencing when government agencies overstep their contractual authority.